Asian markets were mixed on Thursday with Chinese and Japanese stocks slipping ahead of an update on the US economy and the European Central Bank tipped to hike its key interest rate.
Mainland China stocks closed lower, as bleak industrial profits and widening Covid outbreaks weighed on sentiment, while Hong Kong shares followed Asian markets higher amid hopes global central banks will slow monetary tightening.
China’s blue-chip CSI300 index fell 0.7%, to 3,631.14 points, while the Shanghai Composite Index lost 0.6% to 2,982.90 points.
The Hang Seng index added 0.7%, to 15,584.56 points, extending a rebound following Monday’s tumble.
Profits at China’s industrial firms fell at a faster clip in the January-September period as Covid curbs and a property crisis continued to weigh heavily on factory activity.
Further damping risk appetite, Chinese cities from Wuhan in central China to Xining in the northwest are doubling down on Covid restrictions in a scramble to halt widening outbreaks.
China’s consumer, industrial stocks fell on gloomy growth outlooks, while defence-related shares corrected after surges recently triggered by expectations of rising geopolitical tensions.
In Hong Kong, most sectors rose, though listed Chinese developers fell 3% to a fresh low amid prolong property market woes.
The Hang Seng Tech Index rebounded for a third straight day, almost recovering Monday’s 10% loss. Alibaba jumped 4.1%, while JD.com surged 5.9%.
Monday’s panic selling in Hong Kong was triggered by the perception that Chinese President Xi Jinping will sacrifice growth for ideology, and stick to zero-Covid, after consolidating power at the Communist Party Congress that closed over the weekend.
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Nikkei Slips
Japan’s Nikkei share average snapped a three-session rally on Thursday, as cautious investors focused on the outlook of individual stocks as earnings season hits full swing.
The Nikkei closed down 0.3% at 27,345.24. It occasionally traded in positive territory in the morning session before paring all the gains in the afternoon. The broader Topix index fell 0.66%.
“The Nikkei was unusually strong yesterday,” Nomura Securities strategist Kazuo Kamitani told reporters in a briefing, referring to the index hitting a nearly seven-week high on Wednesday.
Canon was the session’s biggest loser in the Nikkei, falling 6.2% after revising its net profit forecast downwards.
While the Bank of Japan is conducting its latest policy review meeting on Thursday and Friday this week, most market participants consider it unlikely that there will be any change to its ultra-easy monetary policy.
Of the Nikkei’s 225 constituents, 164 declined, 54 advanced, and seven traded flat.
Miners Lift ASX
Australian shares rose to their highest levels in over a month on Thursday, helped by firm commodity prices, although gains were capped by worries over the country’s hotter-than-expected inflation reading.
The S&P/ASX 200 index rose 0.5% to 6,845.10 points at the close of trading. The benchmark climbed 0.3% on Tuesday.
Domestic mining index rose 1.9% as a slew of positive production reports from miners tempered concerns about retreating iron ore prices, which slumped on a gloomy demand outlook for steel-making commodities in top consumer China.
World’s no-4 miner Fortescue Metals reported a 4.2% rise in first-quarter shipments and kept its full year forecast unchanged.
Lynas, the biggest rare earths miner outside China, also reported a 34.7% jump in its first-quarter revenue, sending its shares up to their highest level in one and a half months.
Gold stocks climbed 3.7% as bullion prices rose on a weaker dollar, while energy index rose 2.4% as oil prices advanced on strong US crude exports and a weaker U.S. dollar.
Financials dropped nearly 0.4%, a day after data showed that Australia’s inflation raced to a 32-year high last quarter, putting pressure on the central bank to return to more aggressive rate hikes.
Meanwhile, shares of Australian Clinical Labs tumbled to a record low, after its Medlab Pathology business suffered a data breach that affected about 223,000 accounts, marking corporate Australia’s fourth major hack since September.
“If attacks like these keep continuing, there will be a lot of pressure on the companies, especially the financial institutions, to reinforce their cyber security,” CMC’s Sheriff said.
Indian Shares Rise
Indian shares closed higher on Thursday, lifted by a rise in metal stocks, and other Asian equities on improved sentiment over expectations that major central banks may get less aggressive about rate hikes.
The NSE Nifty 50 index advanced 0.5% at 17,736.95 at close, and the S&P BSE Sensex ended 0.4% higher to 59,756.84.
“The market is consolidating because we’ve had recent gains and global cues are mixed,” said Ajit Mishra, vice president of research at Religare Broking.
In the broader market, Asian peers rose on Thursday on hopes of less hawkish central banks. European equities fell as traders were cautious ahead of an expected 75 basis point from the European Central Bank.
In domestic trading, the Nifty’s metal index was 2.7% up to close at a one-month high.
JSW Steel, Hindalco Industries, and Tata Steel led gains on the Nifty 50 index throughout the trading session, finishing between 2% and 5% higher.
- Reuters with additional editing by Jim Pollard
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